The Grade A office block in Church Street
could be worth around $900 million
" Business Times understands
that Cushman & Wakefield will be appointed as marketing agent for the
property. It was one of about four or five property consultants invited to
make submissions under a Request for Proposal recently.
The property has a net lettable area of
386,525 sq ft, comprising a 16-storey office tower, two rows of
conservation shophouses and over 360 car park lots. It is on a site with a
remaining lease of about 84 years.
Capital Square is owned by Germany's
Ergo Insurance Group and managed by MEAG Pacific Star Asset Management, a
joint venture between Pacific Star Group and MEAG, which is asset manager
of Munich Re and Ergo.
The building was developed by Keppel
Land and Rodamco. The duo sold the property around late 2002 in a deal
that valued the asset at $490 million to Ergo. That transaction was
structured as an asset securitisation which raised $505 million through
the issue of seven-year bonds. Market watchers recall that ahead of the
bonds' maturity, Ergo had mulled a sale of the asset last year, but in the
end opted for a $549 million refinancing deal which involved the issuance
of notes arranged by Australia and New Zealand Banking Group.
BT understands that Cushman could be
planning a tender or expression of interest exercise for the sale of
Capital Square next month with a view to concluding a deal by April 2011.
Some industry players suggest that
Capital Square, which was completed in 1998, could fetch about
$2,300-2,400 per square foot, or about $889-928 million. They based this
on the $2,400 psf achieved (excluding income support) for K-Reit Asia's
and Suntec Reit's recent purchases of a one-third stake each in Marina Bay
Financial Centre's Phase 1 (comprising two Grade A office towers, Marina
Bay Link Mall and over 600 carpark lots).
'However, MBFC is a brand new
development while Capital Square is 12 years old. There may also be space
coming up for re-leasing from next year when some tenants move out,'
points out one property consultant.
Major tenants at Capital Square include
Citigroup, Morgan Stanley and Bloomberg. It boasts column-free floor
plates of up to 30,000 sq ft for the office tower, among the biggest in
the location.
'This is one of the better-quality
office buildings in the Raffles Place area. The landlord could probably
charge rentals today above $10 psf a month,' said an office leasing agent.
So far this year, about $8.8 billion
worth of office investment sales deals have been done.
Besides K-Reit's and Suntec Reit's
acquisitions of a one-third stake each in MBFC Phase 1, other major deals
include DBS Towers ($870.5 million), Chevron House ($547.1 million) and
GuocoLand's purchase of the site above Tanjong Pagar MRT Station with a
minimum office component.
- 2010 December 23 BUSINESS TIMES
| Location |
5 minutes from Raffles
Place MRT station, Singapore Stock Exchange |
| Anchors |
Citibank N.A. and Morgan
Stanley Asia |
| Features |
Floor plates of up to
30,000 sq ft within the CBD |
| Total area |
338,800 sq ft - 31, 476
sq m Office
48,000 sq ft - 4,460 sq m
Retail
384,000 sq ft Gross |
| Teunure |
99 year leasehold |
| TECHNICAL: |
| Floors
(over ground) |
16 |
| Year
(start) |
1996 |
| Year
(end) |
1998 |
| Height
Floor-to-ceiling |
2.75 m |
9.02 ft |
|
|
HISTORY
Keppel Land and Dutch property fund
group Rodamco are negotiating to offload their stakes in Capital
Square office building in a sale that may involve an asset
securitisation deal that could be worth up to $500 million, say
sources.
Last month, KepLand reiterated in
an announcement to the Singapore Exchange that it is working towards
the divestment of its investment buildings through various methods to
further reduce its debt.
German insurance giant Ergo and its
associates are said to be negotiating to take part in a potential
Capital Square deal, which may be similar to the $450 million asset
securitisation of Wisma Atria in Orchard Road earlier this year.
That deal involved Ergo and another
German insurance group subscribing to one of the three tranches of
bonds - Junior B - issued by a special purpose vehicle (SPV) set up to
buy Wisma.
The Junior B bonds were stapled
with preference shares in the SPV that allow Ergo and its partner to
have a conversion option to take a 100 per cent stake in the Wisma
Atria space covered under the deal at the end of the five-year term of
the bond.
In return, the Junior B bondholders
will have to redeem the two other classes of bonds.
As for the 384,000 sq ft Capital
Square - a 99-year leasehold project comprising a 16-storey office
tower and 19 shophouse units owned 70:30 by KepLand and Rodamco -
sources say the price is still under discussion.
Some have suggested the building
might be sold at between $1,200 and $1,300 per sq ft, although some
consultants said that with the current weak sentiment in the office
market, a prime office building in the Raffles Place area would fetch
closer to $1,100 psf.
One factor that will help underpin
the asset's price is its strong rental income stream. Anchor tenants
like Citigroup, Morgan Stanley and others were locked in at high rents
- some in the $9 psf range - negotiated at the peak of the office
market.
Citigroup, for instance, is known
to have a long lease with periodic rental reviews, the first of which
is said to be in about three years' time. Capital Square, opposite
Golden Shoe Car Park, was completed in late 1998 and at the time that
Rodamco's purchase of the 30 per cent stake was announced in May 1997,
the project's approximate market value was reported at $750 million.
Analysts said the building's value
would have been written down in KepLand's books over the years in line
with falling office values.
KepLand, formerly known as Straits Steamship
Land, bid fiercely for the site, paying $392.1 million or $888 per
square foot per plot ratio for the parcel in an August 1995 state
tender. At the same tender, the property developer also bagged a
neighbouring parcel which it later developed into Prudential Tower.
- by Kalpana Rashiwala Singapore
Straits Times 12
October 2002 |
